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National Collaborative Announces $80 Million Investment in Five Cities

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Living Cities, a collaborative of 22 of the world’s largest foundations and financial institutions, announced today that it will invest $80 million in five U.S. metropolitan areas to create innovations that address intractable problems affecting low-income people.

The Living Cities Integration Initiative will provide financial packages of grants, loans and so-called Program-Related Investments in Detroit, along with Cleveland, Minneapolis-St. Paul, Baltimore, Md. and Newark, N.J.

In each community, the public, private, philanthropic and non-profit sectors have agreed to work as partners to tackle critical issues impeding access to opportunity for low-income residents. The initiative takes a different form in each of the five regions and focuses on issues that include education, housing, health care, transit and jobs.

“The Integration Initiative was designed to take advantage of all we have learned about catalyzing changes in cities over the past 20 years,” said Living Cities CEO Ben Hecht. “Cities need flexible resources to help them move innovation from the periphery to the mainstream, to integrate change across disciplines, geographies, sectors and funding sources.”

The Integration Initiative will result in concrete outcomes, from tens of millions of dollars in business opportunities to jobs and housing construction and rehabilitation. In order to achieve long-term results, the Integration Initiative seeks to create a new framework for solving complex problems; challenge obsolete conventional wisdom; and drive the private markets to work on behalf of low-income people. Ultimately, the goal of the Initiative is to create a “new normal” in which systems and practices work more effectively on behalf of urban residents.

One of the most unique aspects of the Integration Initiative is the involvement of the financial institutions that are members of Living Cities, who will provide $50 million in commercial debt. Each location has designated a Community Development Financial Institution (CDFI) or other financial intermediary to borrow the funds from the commercial lenders and then relend them to appropriate borrowers in the community. The funds are intermediate-term debt and may be used for a variety of purposes, including acquisition of land and property, construction and preservation of affordable housing, and development of mixed-use facilities. The funds also will provide working capital and real estate loans to businesses. The loans are provided at attractive rates and on favorable terms.

Today’s announcement was made at the Charles H. Wright Museum of African American History in Detroit. The launch event was attended by mayor-led teams of public, private and nonprofit leaders from each of the winning metropolitan areas and representatives from the foundations and financial institutions that comprise Living Cities.

Foundation members of Living Cities are AARP Foundation, Bill & Melinda Gates Foundation, Citi Foundation, Cleveland Foundation, Ford Foundation, John S. and James L. Knight Foundation, Robert Wood Johnson Foundation, Surdna Foundation, The Annie E. Casey Foundation, the John D. and Catherine T. MacArthur Foundation, the Kresge Foundation, the McKnight Foundation, the Rockefeller Foundation, the Skillman Foundation, and W.K. Kellogg Foundation.

Financial services sector members are AXA Equitable, Bank of America, Deutsche Bank, JP Morgan Chase, MetLife, Inc., Morgan Stanley and Prudential Financial, Inc.

The Living Cities Integration Initiative targets four important goals:

1. Create a new framework for solving complex problems. Leaders often do not work together across sectors, and issues are addressed in silos created as a result of both policy and tradition. For example, governments often design and fund workforce training programs without first identifying the skills most needed by local employers. Similarly, few communities intentionally marry training, child care and housing policies together to insure success, despite the obvious need to do so. The Integration Initiative brings together multiple issues affecting low-income residents and all the partners required to tackle the challenges that impede progress toward solutions. This includes decision-makers from government, philanthropy, the non-profit sector, and the business community.

2. Challenge obsolete conventional wisdom. Essential systems such as education and transportation were built decades ago and are based on outdated assumptions, such as the imperative of a nine-month school year to accommodate summer harvests, and an endless supply of oil. The Integration Initiative makes space for innovation, supporting bold new approaches for breaking through critical impasses and disrupting antiquated systems and processes.

3. Drives the private market to work on behalf of low-income people. The Integration Initiative attracts private sector capital, structures investments to balance risk and reward, and brings mainstream market goods and services, such as grocery stores and financial services, to underserved people and communities.

4. Creates a “new normal.” In the past, innovative work to improve the lives of low-income people has often consisted of a series of pilots; as the pilot ended, so did the work. The Integration Initiative creates new ways of doing business. It permanently drives public and private sector funding streams away from obsolete approaches and applies them to these new solutions. It also sets new policy priorities; uses data to track, ensure and communicate accountability for results; and institutionalizes these changes.

The five winners announced today were selected after a comprehensive competitive process. After issuing invitations to apply early this year, Living Cities received 23 Letters of Interest from 19 cities spanning the country. These were reviewed by the foundation and financial services sector leaders who comprise the Living Cities membership, and nine were invited to submit full applications. Each of the finalists produced its application in collaboration with key partners that included municipal government and other public sector entities, representatives from the philanthropic sector, private institutions, non-profit establishments and a financial intermediary, usually a Community Development Financial Institution. These partners will form the core of the implementation team for each city’s initiative.

The following is an overview of the initiatives to be undertaken in each of the five cities.

Baltimore – Together with anchor institutions such as Johns Hopkins University, the Annie E. Casey Foundation, city and state government and non-profit partners, the Baltimore Integration Partnership will focus on creating job opportunities and improving neighborhoods in Central and East Baltimore, while preparing residents for opportunities created by the construction of the Red Line, a 14-mile east-west transit line.

Cleveland – The initiative will work with nationally significant institutions including the Cleveland Clinic, University Hospitals and Case Western Reserve University to implement procurement, hiring, employee incentives and capital investment programs that develop local jobs and businesses that benefit low-income people in the region.

Detroit – By focusing on the Woodward Corridor, home to Detroit’s major universities and hospitals, the initiative will create a model for older industrial cities of concentrating population and activity in sustainable corridors, expanding opportunity for low-income residents, and reusing vacant land.

Newark – This initiative will work to create a healthful environment through integrated investments in housing, public safety, access to healthcare, green space, fresh and healthy foods and employment. Newark’s strategy is focused on alleviating the environmental conditions that create barriers to residents’ advancement by creating a “wellness economy” that improves both the supply of and demand for safe, healthy and affordable options.

Twin Cities – The initiative takes advantage of substantial investments in three regional transit lines to create a model of how development of transit can expand opportunity for low-income people. The initiative brings together leaders from local, regional and state government, along with the private, philanthropic and not-for-profit sectors to develop frameworks to create and preserve transit-accessible affordable housing and mixed-use, mixed-income developments; to help small, often minority- or immigrant-owned businesses weather transit corridor construction; and to forge planning and investment strategies that catalyze neighborhood-led development, link residents with job opportunities, and establish a more appealing private investment environment in transit corridors.

Founded in 1991, Living Cities is a unique philanthropic collaborative of 22 of the world’s largest foundations and financial institutions. Over the past 19 years, Living Cities has invested more than $1 billion in American cities-leveraged into $16 billion and making a demonstrable difference in neighborhoods throughout the nation. Our members are not simply funders. They participate at the senior management level on the Living Cities Board of Directors and contribute the time of 80+ expert staff toward crafting and implementing an agenda that is squarely focused on improving the lives of low-income people and the urban areas in which they live.

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